Bloomberg News

Tesco Sells Its First Euro Bonds Since ‘09 Amid EU Crisis Talks

October 27, 2011

Oct. 27 (Bloomberg) -- Tesco Plc, Britain’s largest supermarket chain, is raising 750 million euros ($1.1 billion) from its first sale of bonds in the currency since 2009 as European leaders bolstered plans to fight the debt crisis.

The grocer’s seven-year securities will yield 105 basis points more than the benchmark swap rate, after initially being marketed at a spread of about 120, according to two people with knowledge of the sale who declined to be identified because the deal is private.

Europe’s credit markets jumped after politicians boosted the region’s bailout fund and bondholders agreed to take 50 percent losses on Greek government debt. Cheshunt, England-based Tesco’s bond offering is its first in the European currency since it raised 600 million euros from 5.125 percent notes in February 2009, according to data compiled by Bloomberg.

“We don’t know yet how long the window will be open, but issuers are bound to take advantage of the better market tone,” said Georg Grodzki, the London-based head of credit research at Legal & General Investment Management.

The Markit iTraxx Europe Index of credit-default swaps tied to 125 companies with investment-grade ratings plunged 22 basis points to 153, the lowest since Aug. 31, JPMorgan Chase & Co. prices at 1:30 p.m. in London show. A decline in the index indicates improving perceptions of credit quality.

Tesco is graded A3 by Moody’s Investors Service and an equivalent A- at Standard & Poor’s and Fitch Ratings.

Investors demand 142 basis points in extra yield relative to the benchmark swap rate to hold consumer company bonds, according to Bank of America Merrill Lynch’s Euro Consumer Cyclical index of 43 securities issued by companies including Carrefour SA, Groupe Auchan SA and Tesco.

“Any sensible issuer is always going to take advantage of firmness in the market,” said Trevor Datson, a spokesman for Tesco who declined to provide details of the transaction.

Bank of America Corp., BNP Paribas SA, Goldman Sachs Group Inc. and JPMorgan Chase & Co. are managing the Tesco deal, said the people.

--Editors: Andrew Reierson

To contact the reporter on this story: Ben Martin in London at; Esteban Duarte in Madrid at

To contact the editor responsible for this story: Paul Armstrong at

The Aging of Abercrombie & Fitch
blog comments powered by Disqus